Two coal producers are revising down their targets for next year and resetting priorities given global economic uncertainties.
PT Berau Coal, Indonesia's fifth largest coal producer, has revised down its planned capital expenditure for next year to US$27 million from its initial plan of $60 million.
"Preparing for the worst, we will be careful in setting our priorities," Berau's president director Bob Kamandanu said on Wednesday.
Bob said the company has set a lower expenditure target for next year because it also had revised down its production target for 2009. He said Berau would produce between 15.5 million and 16 million tons of coal, down from an initial target of 18 million tons.
By end year 2008, Berau forecast it would produce about 14 million tons of coal compared to its initial target of 15 million tons.
Bob said the new 2009 target would be easier for the company's partners to achieve under the current unfavorable economic conditions.
"We pretty much depend on our contractors who work mainly with heavy equipment. This heavy equipment is not purchased with cash, but acquired through leasing which is harder to arrange during an economic crisis.
"If we set high targets and offer more coal to buyers, we will face penalties if we cannot meet our commitments," Bob said.
He pointed to the likelihood of decreasing demand from importing countries, including China, as another reason for the company to lower its production target.
With reduced investment spending, a number of projects would consequently be delayed, Bob said.
One of these is a port upgrading project in Suaran, Berau Regency, East Kalimantan. Previously the project was expected to be finished by 2010, but the company would now delay completion until 2011.
Another coal producer, state owned PT Tambang Batubara Bukit Asam (PTBA), said it would also reconsider its long term projects, including a steam-turbine power plant project.
"We are still analyzing our plans. But, it seems that we may reconsider projects that need finance from overseas funds," said president director Sukrisno, so as to respond to the ongoing global credit crunch.
He was quick to add however that the company would not back down from any plans that could harm directly the company's production capacity. Bukit Asam for example would move forward its project to enlarge its dock facilities at Tarahan, Lampung Province.
Bukit Asam forecasts it will produce 10 million tons of coal this year.
It has yet to finalize its plans for 2009, but Sukrisno said production would likely increase due to the expected high demand for coal because of the government's 10,000 megawatt electricity program.
Source: The Jakarta Post
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